Question

For a particular Rocky Airlines flight, the plane has 250 seats, 220 tickets have been sold for an average price of $140, the fixed costs per flight are $20,000, and the variable costs per passenger are $40. What is the contribution margin per passenger?

Answer 1

Answer:

$100

Explanation:

Data provided in the question:

Total number of seats in a flight = 250

Number of tickets sold = 220

Average selling price of the tickets = $140

Fixed cost per flight = $20,000

Variable costs per passenger = $40

Now,

The contribution margin per passenger is calculated as:

⇒ Ticket Selling price per passenger - Variable cost per passenger

Thus,

Contribution margin per passenger = $140 - $40

= $100